updated 9/4/2007 9:34:45 PM ET 2007-09-05T01:34:45

Pakistan's President Gen. Pervez Musharraf and exiled rival Benazir Bhutto have moved closer to a deal that could see them share power and restore democracy but key sticking points remain, Bhutto's party and the government said.

The pact is also supposed to bolster Pakistan's fight against extremism — a need underlined by twin suicide attacks that killed at least 25 people and wounded 68 near the capital on Tuesday.

The bombings tore through a high-security area of Rawalpindi, the city that hosts Pakistan's army headquarters. The deadliest blast devastated a Defense Ministry bus, killing 18 military and civilian employees.

Authorities suspected the attacks were linked to pro-Taliban militants near the volatile Afghan border. The violence deepened the sense of crisis in Pakistan, already roiled by political uncertainty ahead of elections as Musharraf maneuvers to extend his eight-year rule.

Bhutto, twice Pakistan's prime minister, met with two envoys of the military leader at her residence in the Arab emirate of Dubai on Tuesday, the latest round in a monthslong dialogue.

The negotiations are aimed at a deal to allow Musharraf, a key U.S. ally, to win a new five-year presidential term from lawmakers by mid-October while allowing the opposition leader to return to Pakistan and contest parliamentary elections due by January 2008.

The talks have been hampered by myriad legal complexities and bitter rivalries, but both sides reported progress Tuesday.

Bhutto spokesman Farhatullah Babar said they had made progress on the holding of elections but that issues including Musharraf's dual role as president and army chief and the balance of power between the presidency and parliament were unresolved.

"No agreement has been finalized, but I would say that discussions resumed," Babar said. "Some progress was made, for which dialogue will continue."

Information Minister Mohammed Ali Durrani also said "the process of negotiations has started to move forward."

No constitutional amendments yet
Babar said the two sides had yet to discuss constitutional amendments that experts say are needed to avoid legal problems surrounding Musharraf's eligibility for a new term as president and to allow Bhutto to seek a third term as prime minister. Musharraf is seeking re-election by lawmakers between Sept. 15 and Oct. 15.

Such changes would require parliamentary votes supported by both Bhutto's party and the ruling coalition.

The deal also faces internal opposition: People's Party lawmakers who feel that a deal with a military leader would tarnish their democratic credentials, and leaders of the ruling Pakistan Muslim League-Q party, who could be sidelined by any agreement with Bhutto.

Complicating the political scenario in Pakistan, Nawaz Sharif, the prime minister ousted by Musharraf in his 1999 coup, plans to return from exile on Sept. 10, despite threats that he could be re-arrested. He says he will challenge the general's bid to extend his rule.

Bhutto, who fled corruption allegations in 1999, has also said she will return in the coming weeks, regardless of whether she reaches a deal with Musharraf, but has set no date.

Musharraf has dominated Pakistani politics since he seized power eight years ago. He became a key U.S. ally after the Sept. 11, 2001 attacks.

But his authority has waned since a botched attempt in March to fire the country's top judge triggered protests and widespread calls for an end to military rule.

Washington continues to praise Musharraf, but is also pressing for a broader-based government that can strengthen Pakistan's efforts against the Taliban and al-Qaida.

Militants have stepped up attacks in recent months, particularly in Pakistan's lawless northwestern frontier, where the state has little control.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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